Ask Mary-Margaret #5: "Licensing issues"

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"Should I license an intellectual property for my game, and what are the benefits and pitfalls involved? How should I evaluate the value of the license, and what should I ask for in the licensing deal?" - Maximizing Profits in Marin

This is a short question that's not easy to answer! Several of our industry friends weighed in on the value of a license and under what circumstances it's appropriate, and the kind of deal points you'll need for a successful licensing development.

Louis Castle of Westwood Studios had this to say on the subject: "I don't believe any game or license is well served by 'attaching' the license to a game. I think a game must be developed around the property you are licensing. Before deciding what to license I would encourage anyone to find a reason to bring a license to a new medium like a computer. If you have no reason, chances are you should not use the license. The type of game should have as much to do with a license as the license has to do with the game. The game should expand upon the experience of the property and increase its value, not hang on the IP popularity."

Chris Downend of Infogrames summarizes his view in two words: "Player appeal. If the licensed property is appealing to players, then it helps the game. The depth and breadth of the appeal determines the value along with its appropriateness for the game. For instance, Shaquille O'Neil is a huge asset to a basketball game; he is less valuable to a fighting game. Shaq also illustrates another factor: a licensed property is frequently uninteresting by itself. Putting Shaq in a basketball game without an NBA license to teams and other players makes a weak product."

Another factor is the competitive landscape, and again, Shaq and basketball is a good example. If you are inventing a game from scratch with a rich story and inventive new play mechanics, then a licensed property is of much less value. But if you are making a basketball game where you are competing against multiple products from other publishers, then you need every edge you can get to stand out in the crowd."

N64 Golden Eye 007

Erik Bethke of Watchfire Games believes that "if the material is a game (D&D, Shadowrun, Star Fleet Battles, Vampire, etc.), it is wise to license the material. The reasons are two-fold: the game system and the mechanics are laid out, and you have a hardcore fan base that will be automatically interested in your game and will contact editors, create websites, fill up your forums with interesting suggestions, etc. On the other hand, (licensing) a recent movie license is pretty useless. The only counter example of this is Golden Eye for N64, that was just plain a good game. The gameplay sold itself. You will simply have to make a great game that stands on its own. I would avoid paying the license fee altogether and just make the game (it is hard enough to make money!)

Once you've made the decision to license a property, then the actual deal becomes incredibly important. Mike McShaffry and Ellen had this to say about deal points:

• What you have to do is really evaluate whether the license will increase your sales. Your deal must reflect the reality of the financial situation. Does the financial arrangement equally benefit both parties? Does the licensor gain non-financial benefit from the use of their license in this game, and is that reflected in the licensing deal?
• What kind of design restrictions will the licensor place upon you? Particularly if this is a flagship property, they're going to want to make sure that you use their property in a way that doesn't risk any damage to their property. Will this inhibit your game design?
• What kind of review or sign-off privileges will the licensor have, and how quickly will they respond? Thirty days is normal, but that is long time to wait when you're trying to ship a product! What happens if the licensor fails to respond within the designated timeframe? Ellen worked on one children's title that had to be cancelled because the licensor couldn't respond in a timely fashion, or basically at all.
• Can the licensor or developer pull out of the deal in mid-production? Is there a fall-back position for your product if that should occur?
• Who is the primary contact at the licensor, and how will they support your product and the agreement? Does this person genuinely have the clout to make decisions and get approvals finalized? What happens if this person leaves the company?
• How much help in the form of access to people, existing material, and other resources will you be allowed to have? How quickly will you be given access to this material after you request it? Ellen had one challenging experience working on a film-based title where the licensor wouldn't tell her if two of the animal characters had spoken lines in the movie!
• Do you know exactly how you are going to use the licensed property, and can you stick to that plan throughout the development cycle? (Licensors REALLY hate surprises.)
• Will you have the option to continue to use the license in subsequent versions of the product? Generally you want to lock them in to the agreement for as long as possible, while the licensor will want the right to renegotiate frequently.
• Before your first meeting with the licensor, are you appropriately prepared? You should have some concept sketches and clear design docs in hand before the initial contact, and technology demonstrations or previous products to show, as appropriate.
  

(Many, many thanks to Erik Bethke, Louis Castle, Chris Downend, and Mike McShaffry for their help with this question!)

Mary Margaret is one of the leading recruiters in the game business, with successful placements ranging from entry level to Vice Presidents, and is the founder of Mary-Margaret.Com.

Ellen Guon Beeman designed and/or produced over thirty titles for top game companies including Microsoft and Electronic Arts, prior to joining Mary-Margaret.Com as a recruiter.

Robin McShaffry became a recruiter with Mary-Margaret.Com after years of working in marketing and creative services at Origin.

Got a game industry-related question for "Ask Mary-Margaret.Com"? We'd love to hear from you! Please write to us at AskMMC@Mary-Margaret.Com

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